The International Atomic Energy Agency has expressed serious concern about Iran's nuclear energy program after finding traces of highly enriched uranium at a major nuclear facility.

A 10 page report to go before the IAEA board of governors in September says the agency is in the middle of an intensive inspection process in Iran.

The agency says it has made considerable progress since June in clarifying the history, extent, and nature of Tehran's nuclear program. The U.N. watchdog, while cautioning against jumping into conclusions, says Iran's uranium enrichment program is of serious concern.

IAEA spokeswoman Melissa Fleming said Iran has largely cooperated with U.N. inspectors, but she says it needs to do more. "There are still a number of outstanding issues in particular with regard to Iran's enrichment program and this is an issue that in our eyes requires urgent resolution and it also requires continued and accelerated co-operation and full transparency on the part of Iran," she said.

The IAEA has monitoring equipment installed at Iran's Natanz plant, where environmental samples have showed traces of highly enriched uranium. Ms. Fleming would not go into details, but said Iran has "a large and sophisticated nuclear program."

Iran says that the presence of enriched uranium is no proof of a secret nuclear weapons program, but is the result of contamination imported from Pakistan. But Western diplomats say the samples show that Iran has failed to declare all nuclear material according to its international obligations.

The U.N. atomic energy agency, at the September meeting of its governors, is expected to call for additional inspections before it reaches any conclusions about Iran's nuclear program.

The government in Tehran has said it would take a "positive approach" to signing the protocol that would give IAEA access to more sites at short notice. But Iran wants "total guarantees" from the international community first. Diplomats say Iran wants assurances that the inspectors would not enter religious shrines or private homes.

Iran maintains its nuclear program is for civilian purposes only. But the United States and other Western governments have accused Iran of maintaining a clandestine nuclear weapons program.